How much should you risk per trade? The golden rule: 1–2% of your total capital. It’s not conservatism—it’s survival.
If you have $10,000, your maximum risk is $100–$200 per trade. Why so little? Because at 2% risk, it takes 50 losses in a row to blow up your account. At 10%, it only takes 10.
The calculation: divide the amount you’re willing to risk by the distance to your stop loss. Example: $200 risk, stop $2,000 away → you buy $100 worth of the asset. If the stop is hit, you lose exactly $200.
Your position size should be adjusted to the trade, not the other way around. A wider stop = a smaller position. A tighter stop = a larger position. But always stay within your limit.
Beginners: start with 0.5–1%. In volatile markets, everyone should lower their risk. Confidence in a setup doesn’t change the actual probability.
Risk management matters more than any indicator. You can have the best analysis and still blow up on a poorly sized trade. Follow for more guides on how not to go broke trying.
#RiskManagement
If you have $10,000, your maximum risk is $100–$200 per trade. Why so little? Because at 2% risk, it takes 50 losses in a row to blow up your account. At 10%, it only takes 10.
The calculation: divide the amount you’re willing to risk by the distance to your stop loss. Example: $200 risk, stop $2,000 away → you buy $100 worth of the asset. If the stop is hit, you lose exactly $200.
Your position size should be adjusted to the trade, not the other way around. A wider stop = a smaller position. A tighter stop = a larger position. But always stay within your limit.
Beginners: start with 0.5–1%. In volatile markets, everyone should lower their risk. Confidence in a setup doesn’t change the actual probability.
Risk management matters more than any indicator. You can have the best analysis and still blow up on a poorly sized trade. Follow for more guides on how not to go broke trying.
#RiskManagement